US unemployment rate drops to 3.5 per cent amid ‘widespread’ job growth

‘Both total nonfarm employment and the unemployment rate have returned to their February 2020 pre-pandemic levels’

The US unemployment rate dropped to 3.5 per cent last month as the US economy added 528,000 jobs, the Bureau of Labor Statistics announced on Friday.

Despite persistent inflation, the Department of Labor said job growth in the US was “widespread” in July, with “leisure and hospitality, professional and business services, and health care” sectors all adding jobs.

The department also said the number of employed non-farm workers and the US unemployment rate are now at the same levels they were in February 2020, before the onset of the Covid-19 pandemic. The number of “long-term unemployed” — meaning persons without a job for more than six months — also decreased to pre-pandemic levels with a drop of 269,000 last month.

Such impressive job growth will further intensify the debate as to whether the US is slipping into a recession amid the growing consensus that the economy is running out of steam following the post-pandemic lockdown boom. Many economists believe a strong jobs market is preventing that from happening.

Labour force participation, which accounts for all people either employed or actively looking for work, remained at 62.1 per cent, which is below the 63.4 per cent rate it was in February 2020. This could indicate a real shift in employment patterns brought on by the pandemic with people either taking up other opportunities, returning to education, caring for family members, or retiring early.

The jobs report showed that unemployment for adult women and white people declined, but the jobless rates for adult men, teenagers, Black people, Asian Americans and Hispanic Americans remained relatively unchanged.

Wages also grew in the past month, rising by 0.5 per cent in the past month and by 5.2 per cent in the past year.

The positive monthly jobs report exceeds predictions from many analysts who had suggested last month’s job gains could be fewer in number than in recent months.

Earlier this week, White House Press Secretary Karine Jean-Pierre had said the Biden Administration was expecting a report in the range of 150,000 jobs added last month — a far smaller number than was reported.

Speaking at a bill signing event on Friday, President Joe Biden boasted that his administration has seen nearly 10 million jobs created since he was sworn in on 20 January 2021.

“That's the fastest job growth in history,” he said.

“Since I took office, we've created 642,000 American manufacturing jobs in America. We've seen the biggest and the fastest job recovery in American manufacturing history since the 50s. And some people may have given up on American manufacturing, but the American people didn't and I never did,” he added.

In a statement, President Mr Biden also noted that last month’s jobs data shows the US unemployment rate at a level that is lower than at any other point in the last half-century.

“More people are working than at any point in American history. That’s millions of families with the dignity and peace of mind that a paycheck provides,” Mr Biden said, crediting his economic agenda — “to build the economy from the bottom up and middle out” — with the jobs boost.

“I ran for president to rebuild the middle class – there’s more work to do, but today’s jobs report shows we are making significant progress for working families,” he added.

The administration and Democratic will seize on such positive news as Americans have grown increasingly anxious about rising prices and the risk of recession.

All of these issues will be at the forefront of the minds of voters in November’s midterms.